OREANDA-NEWS. December 10, 2008. The PROTEK Group has marked another anniversary among its producer partners and people from the finance and investment community. The celebrations took place at the Metropol Hotel on November 27, and started with a conference entitled PROTEK Group: Stability. Sustainability. Growth. Speaking at the conference, the representatives of the Holding Company and market analysts provided their forecasts for the industry in the new crisis-ridden reality.

The keynote speech entitled Synergy as a Factor of Sustainability for PROTEK Group was delivered by Alexey Molchanov, General Director of CV PROTEK. Addressing to the audience he outlined the inter-segment partnership factors, which secure the competitive edge of the Group’s companies and of the holding company in its entirety, and also help to retain sustainability under the current circumstances. According to Alexey Molchanov, each company of the Group makes its own contribution to the Holding’s effective and steady development. CV Protek is the core of the Group, which makes single information systems available for controlling all business segments and а high-class logistical infrastructure. In addition to that, the distributor accumulates information about the needs of the partners in joint production, and also provides its producer partners with joint programs for promotion of medications for the benefit of the end user. The Rigla pharmacy chain is the Group’ navigator in the world of retail and is a guaranteed marketing channel for the distribution and production segments.  CV PROTEK accounts for 4% of shipments to this chain. Sotex FarmFirma as a production unit, secures an important competitive advantage of the Group, which is the possibility for the partners to engage in joint production at a modern GMP-compliant plant. The manufacturer ships 49% of its finished products to CV PROTEK.

According to General Director, the strategy of the Group provides for further enhancement of the inter-segment partnership and strengthening of the Group’s sustainability. In particular, plans are in place to increase the share of supplies to the Rigla pharmacies by CV PROTEK from the current 60% to 80%. The uninterrupted supply of medications to Rigla (currently daily and nightly seven days a week) will further be improved. They also have plans for joint (by CV PROTEK and Rigla) promotional programs for the end user and the establishment of a single sales data base. The partnership with the production segment will develop through new production projects using contractual arrangements for supply of exclusive medications made by CV PROTEK (upon the order is placed), development of the inpatient and outpatient units together with the CV PROTEK’s units, as well as promotion of the medications through the marketing events held by CV PROTEK.

Alexey Molchanov also commented on financial performance indicators of the holding company, which recent growth dynamics, said Mr. Molchanov, shows the results of the inter-segment partnership within the Group. The consolidated earnings of the Group amounted to USD 2,474 bln in 2007 and USD 1,441 bln in 1H 2008 showing growth dynamics of 32.4% as compared to the same period of 2007. Specifically, the earnings by the Distribution segment amounted to USD 1.25 bln in 1H 2008 (up 25%), earnings by the Retail segment amounted to USD 205.5 mln (up 113%), and those by the Production segment amounted to USD 60.4 mln (up 34%). Mr. Molchanov pointed out the gradual re-distribution of the share of segments in the Group’s earnings. For example, in 2007 the earnings of the Retail segment (USD 205.5 mln) accounted for 9% of the Group’s earnings (USD 2,474 bln), the forecast for 2008 has this number standing at 14% already. According to General Director, this is due to the financial synergy of the holding, which helps to provide investment support to and develop promising areas of business activities.

Alexander Kuzin, General Director of DSM Agency, spoke about the evolution of the pharmaceutical market during the crisis. Mr. Kuzin’s speeches invariably stir lively interest and have become an established tradition during the celebratory conferences. According to the expert, the crisis has so far affected Russia’s pharmaceutical market to a small extent: The consumption of the medications is still comparable with the last year’s numbers. However, the market will slow down already in 2009. According to Mr. Kuzin, the Russian market of medications will remain almost unchanged in terms of growth in US dollars next year. In order to keep the level of product sales unchanged, the producers have only one way to go, which is to provide credit financing of retail business in the form of provision of goods.

The conference was closed by the report delivered by Serge Scott, General Director of IMS Company in charge of CIS and Balkan countries. This company is a recognized analytical guru of the global pharmaceutical market. The data featuring in the report concerned the development of the industry in the post-crisis reality of 2009. According to the expert, 2009 will see the global re-distribution of the market growth indicators with China, Russia, India, and South Korea showing the greatest developmental dynamics, whereas the USA and a number of other developed countries will face decline in consumption of medications.